Expense Ratio

Expense ratio measures the share of a property's income consumed by operating expenses, expressed as a percentage. A lower expense ratio means more of each dollar of income flows through to NOI.

Example

$1,060,000 in operating expenses against $1,710,000 in EGI gives a 62% expense ratio.

Formula

Operating Expenses ÷ Effective Gross Income = Expense Ratio

Excel Formula:

• B7 = Operating Expenses
• B6 = EGI